Segment Information

6 Months Ended

Jun. 30, 2019

18.	Segment Information

The Company operates in one line of business, which is operating acute inpatient psychiatric facilities, specialty treatment facilities, residential treatment centers and facilities providing outpatient behavioral healthcare services. As management reviews the operating results of its U.S. Facilities and its U.K. Facilities separately to assess performance and make decisions, the Company’s operating segments include our U.S. Facilities and U.K. Facilities. At June 30, 2019, the U.S. Facilities segment included 225 behavioral healthcare facilities with approximately 9,400 beds in 40 states and Puerto Rico, and the U.K. Facilities segment included 370 behavioral healthcare facilities with approximately 8,800 beds in the U.K.

The following tables set forth the financial information by operating segment, including a reconciliation of Segment EBITDA to income before income taxes (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Revenue:
U.S. Facilities	$	509,813		$	481,470		$	997,773		$	943,875
U.K. Facilities		279,549			284,268			552,206			564,104
Corporate and Other		—			—			—			—
	$	789,362		$	765,738		$	1,549,979		$	1,507,979
Segment EBITDA (1):
U.S. Facilities	$	135,396		$	130,002		$	254,404		$	247,126
U.K. Facilities		45,835			54,194			85,891			105,346
Corporate and Other		(22,345	)		(19,182	)		(45,406	)		(41,727	)
	$	158,886		$	165,014		$	294,889		$	310,745

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Segment EBITDA (1)	$	158,886		$	165,014		$	294,889		$	310,745
Less:
Equity-based compensation expense		(4,182	)		(7,129	)		(10,283	)		(14,048	)
Transaction-related expenses		(5,212	)		(2,887	)		(9,533	)		(7,655	)
Debt extinguishment costs		—			—			—			(940	)
Interest expense, net		(48,610	)		(45,812	)		(96,740	)		(91,055	)
Depreciation and amortization		(41,077	)		(39,928	)		(81,657	)		(79,701	)
Income before income taxes	$	59,805		$	69,258		$	96,676		$	117,346

	U.S. Facilities		U.K. Facilities			Corporate and Other		Consolidated
Goodwill:
Balance at January 1, 2019	$	2,044,837	$	351,575		$	—	$	2,396,412
Increase from 2019 acquisitions		36,528		—			—		36,528
Increase from contribution of redeemable noncontrolling interests		3,300		—			—		3,300
Foreign currency translation loss		—		(1,215	)		—		(1,215	)
Balance at June 30, 2019	$	2,084,665	$	350,360		$	—	$	2,435,025

	June 30, 2019		December 31, 2018
Assets (2):
U.S. Facilities	$	3,995,903	$	3,779,040
U.K. Facilities		2,543,030		2,175,809
Corporate and Other		251,485		217,655
	$	6,790,418	$	6,172,504

(1)

Segment EBITDA is defined as income before provision for income taxes, equity-based compensation expense, transaction-related expenses, debt extinguishment costs, interest expense and depreciation and amortization. The Company uses Segment EBITDA as an analytical indicator to measure the performance of the Company’s segments and to develop strategic objectives and operating plans for those segments. Segment EBITDA is commonly used as an analytical indicator within the health care industry, and also serves as a measure of leverage capacity and debt service ability. Segment EBITDA should not be considered as a measure of financial performance under GAAP, and the items excluded from Segment EBITDA are significant components in understanding and assessing financial performance. Because Segment EBITDA is not a measurement determined in accordance with GAAP and is thus susceptible to varying calculations, Segment EBITDA, as presented, may not be comparable to other similarly titled measures of other companies.

(2)

Assets include property and equipment for the U.S. Facilities of $1.4 billion, U.K. Facilities of $1.7 billion and corporate and other of $49.3 million at June 30, 2019. Assets include property and equipment for the U.S. Facilities of $1.4 billion, U.K. Facilities of $1.7 billion and corporate and other of $44.9 million at December 31, 2018.